It’s time to curtail the current cab cartel

Fiona Townsley

May 11, 2022

Burdensome regulation takes small taxi companies out at the knees, hikes prices and stifles innovation. By streamlining the regulatory framework we would create cohesion across vehicles and authorities benefiting the driver and the passenger alike.

The UK has a disjointed devolved system of licensing with 316 different authorities. These all have complex, varied regulations, much of which is revised on an ad hoc basis. Any company operating in multiple jurisdictions must constantly adapt their processes to comply with the ever changing regulations, many of which are outdated, unnecessary and costly.

The Manchester licensing authority requires operators to open and maintain an office within the geographic boundaries for the licence to be granted. In this case, not only is the consumer paying for the journey, but for unnecessary and expensive office space too. Some authorities even stipulate that these offices are fully stocked with certain computers, office equipment, fax machines and more. The irony must be lost on these bureaucrats, who are most likely working from home while forcing offices to remain open unnecessarily.

There are also disparities from vehicle to vehicle. Under current regulations, taxis and PHVs can advertise but ride-sourced vehicles cannot. Transport for London (TfL) made £158.3 million in 2019/20 from fees for advertising space alone, meaning if this was applied across the board, it could supplement wages or reduce fare prices.

There is no reason to hold taxi drivers to a higher standard than all other road users. If a driving licence is sufficient for someone to be considered safe on the road, it should be sufficient to drive others on the road. This should include any driver’s licence from a signature country of the Vienna Convention on Road Traffic as opposed to the current tiered system where only a subset of those licences accepted for general road use are recognised for taxi or PHV driving. Rather than relaxing the requirements, the Government is considering making them more restrictive with suggestions of an Ofqual certified driving proficiency test or an English language test, despite evidence that extra qualifications don’t make the roads any safer.

The average car in the UK is 8.6 years old but some taxi and PHV regulations become far more stringent after 5 years. Considering we wouldn’t bat an eyelid at a 5 year old car in any other setting, this is a disproportionate response to a non-issue, cutting many people out of the occupation and increasing costs. Provided the car is considered safe (through regular MOTs) there is no reason to introduce more hoops for these drivers to jump through.

Not only are these regulations counterproductive for the driver and the passenger, but they slow down progress. Overly stringent vehicle regulations are hardly a modern phenomenon. In 1865 a man with a red flag was required to walk at least 60 yards ahead of any vehicle, made possible by the speed limit of 4mph. This contributed significantly to the stagnant car development in the UK before the 1900s. In a world where flying taxis are being developed, if there’s a time to reform the regulatory system around taxis, it is now.


Written by Fiona Townsley

Fiona Townsley is a Research Associate at the Adam Smith Institute.

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